twitter @scottwapnercnbc. let's go right over to "power lunch." >> thank you, scott. we begin with breaking news. we are going to listen in to that gentleman, jpmorgan ceo jamie dimon. let's hear what he has to say at the council on foreign relations. >> the board's doing its own independent review. there are some lessons learned which we're embedding across all companies. businesses make mistakes. they learn from it. and they get better for it. that is what business is. you know? only when i come to washington do people act like making a mistake is -- should never happen. of course it happens. only academics and politicians somehow is it not allowed. >> i won't take that last comment personally. >> why don't i open it up at this point. i might have one or two at the end i want to close with, but

let me open -- away from microphone, let us know your name an your affiliation. i see a gentleman there -- right next to the microphone. yes, sir. >> father andrew from the monastery in mt. athos. in august the economist reported that the roman catholic church spent approximately $171.6 billion in 2010. about $18 billion of that was financed through municipal -- tacked through municipal bond purchases. what is jpmorgan doing to help faith bases organizations borrow to immediate our capital needs over the long term. right now is a good climate for us, for example. my mon sthaer is 1,600 years old. we want to borrow now and pay it over time. >> how much you want to borrow? >> what rate? >> that's a great question.

we bank governments not-for-profits. i know we bank churches. i just don't know the actual numbers. i'd be happy to share with them if you sen me ad me an e-mail. that's what we do, advise people, what's reasonable and not reasonable. a lending business, banks, unlike other institutions, often has to say no. sometimes we say we're not going to do it and it is not good for you, either. like selling someone too much liquor or letting them have that fifth drink at the bar. send me an e-mail. >> taking a slightly broader answer to that question, take a minute, talk about your definition -- here you are this large organization, you have enormous profits. what is your sense of corporate social responsibility? what sort of program -- what does jpmorgan define for

itself -- >> i've never had a conflict over this. my job is to build a healthy, vibrant company. and i want -- in every community you operate in, including greece, italy and spain, for to you think we're a good corporate citizen. no different -- i really mean this -- than that corner store. that corner store participates in the community, they help the little league or local church. they participate, give people summer jobs -- >> that's jpmorgan's ceo jamie dimon making news this hour. he spoke on a wide variety of issues before the council on foreign relations. bertha coombs has been monitoring the whole discussion taking place. you have some of the headlines, bertha. one of the things that struck me, he said that anywhere on earth if you could pick a place to invest, it would be the united states. that would be the strongest place that you could put your money. and also he said, businesses make mistakes in addressing the london whale issue. he said that's what business is about. you make your miss tatakes and

learn from them. >> he also sort of says, in a way, that government is headed towards making a very big mistake. jpmorgan's jamie dimon, never one to mince words, speaking at the council of foreign relations in washington this morning. he warns legislators that going off the so-called fiscal cliff is an unacceptable option for the nation and the economy. >> there are all these potential outcomes. i would defy any one of you to really know what they are. therefore, it is irresponsible policy just to say, let's see. let's not see. i mean risk management says let's try to avoid that. >> dimon says he has even bigger issues with the tone in washington regarding american business right now. >> if you think that washington and business can go to war with each other and it is going to be good -- terrible error. i mean collaboration is what should happen. we should have had collaboration. we were in a crisis. every busy know wanted help to

get things done and would have pulled together, worked around the clock but it became a war. now we're relitigating parts of those wars. dodd-frank and health care. it's all being relitigated. >> on the issue of collaboration, he talked about what's going on o in europe to try to stem the debt crisis. and he said, you know, the thing about europe is it has the will but not the way. we have the way. but not the will. >> we are going to keep monitoring it. thank you very much,dimon has a this discussion. we'll bring you headlines and perhaps dip back into that discussion as news warrants. ty, down to you. good to have you back, my dear. >> thank you very much, sue. as you have probably been noticing by checking out the ticker, dow industrials now down 105 points. nasdaq down 17. the s&p off about ten points. that's just in the last couple

of moments. >> we've had a fairly weak start to october, no doubt about it. sitting near the lows for the day now. bear in mind -- we're only 2.8% off of the highs that we saw just a few weeks ago. take a look at the s&p 500. we're at the lows for the day. not too far off the old highs. the important thing elsewhere -- the euro has been moving up today. that's beneficial for the stock market so you can't blame it on europe. now this is weakness here in the united states. major sectors -- energy, materials, health care, normally dollar down. what helped energy and material stocks, that's not helping today. those sectors to the downside are energy and materials. i want to point out crude reversed and some of those energy stocks are really to the downside. energy stocks -- chevron with a profit warning on the hurricane issues. we see all the refiners weak as well today, as well as oil service numbers. >> back to you, sue. breaking news in the bond market -- $21 billion in 10-year

notes up for auction. we just showed you the results on the screen a moment ago. this follows a very strong auction yesterday. rick santelli, have you had a chance to take a look at the demand and what's your grade? >> alls i can tell you is w-o-w -- cow! this is an 8%-plus auction. the intraday charts, there's a little bit after rally dropping yields down a bit, couple basis points in the 10s. maybe even help the deterioration, somewhat, or push the equities. but, yes, we had 21 billion reopen 10s, an issue originally auctioned two months ago. 1.70% is the yield. that's through where the wi was trading. it represented the loeftw of thi but that low was before our time session. we looked at dealers only taking 35%. they might be scrambling coming back into the market buying

a-plus, great demand on the 10-year. >> thank you, rick. these fresh 10-year yields are probably going to help set where mortgage rates go. they are at record lows of course but the number of people applying for mortgages is down 1.2% last week. refinancing applications also fell but they're still pat a three-year high. but what people are doing with all that extra money. that's the question we posed to cnbc's diana olick joining us from washington with the answers. hi, diana. >> reporter: it is a lot of cash but not the cash-out re-fis we saw during that housing boom. these are cash-in. freddie mac ran exclusive numbers for us and puts it at $7.1 billion in re-fi savings just through june of this year. that's given lower rates and higher volumes thanks to the government's expanded re-fi program for underwater borrowers. still according to freddie mac, 81% of re-fiers even kept the same loan amount or lowered

their principal balance. that's the highest level in the 27-year history of that survey. i asked mortgage and lender brokerages what that mean. "a lot of borrowers are putting the extra cash directly into savings plans. others are paying down the loan." another analyst said, "many are using the lower rates to reduce the term of the loan, again paying off the principal faster." and, "re-fi to a lower payment but they keep making the previous payment in order to pay down the loan faster." yes, some are doing home improvements but not at the rate we saw during the housing boom when cash-out was king. home depot downgraded by oppenheimer today. an yesterday owens-corning cut its full-year forecast. >> thank you very much.

it is worth taking another look at that 10-year yield, because as the stock market keeps dropping an we've been down triple digits, it's not just the auction that's driving the 10-year yield but it is also the sell-off in equities. right now the 10-year has hit a new low for today's trading session. we're at 1.70%. keep in mind when we came into the market this morning we were at 1.74%, about. so, ty, it's been a pretty decent drop in yields so far today. >> sue, thank you. we're keeping an eye also on toyota. the japanese automaker now recalling almost 7.5 million vehicles around the world. biggest car recall since 1996. it's all because after faulty power window switch. there is a look at the chart of toyota, down about 2% at $74.59. phil lebeau joins us from chicago. phil, initially toyota said it didn't need to do a recall. what's happening? >> that was back earlier this year when these first reports came out about problems with the

window switches. now they've had a complete reversal, not only in the u.s. but around the world recalling 7.4 million vehicles worldwide, 2.5 million here in the u.s. it is a variety of models between '05 and '10. go to cnbc.com to find out which specific models are listed. no major injuries or deaths linked to the fire hazard. but toyota initially told the federal government that the faulty switch was not a defect, but as investigators looked further into the issue, there was a change of heart. this is the third major window switch recall we've had in the last month. toyota here in the u.s. you see, gm, a quarter million in the u.s., and honda almost 200,000 here in the u.s. we've had a slew of these problems with window switches. as we look at shares of all of three, you can see all of them have been trending lower offense the last couple of weeks. tyler, just the sheer number hear -- 7.4 million worldwide.

you'd think this is huge for toyota. it is going to cost them a little over $100 million to repair but their damage to the reputation is much greater. >> it was not all that long ago, of course, phil, that toyota and lexus went through massive recalls with the acceleration problems that were identified. how much damage does this now second very large recall do to toyota's reputation for quality? >> not as much. it certainly doesn't help but not as much because this is not a case where people are being told don't drive a particular vehicle, or don't buy a particular vehicle. but clearly when people are in the market looking for a vehicle, any time you hear headlines where 7.4 million vehicles are recalled, it does make people sit there and say, is there a quality problem here? >> does get your attention. phil lebeau, thank you. we want to recap the markets for you because the sell-off has accelerated just in the last half-hour or so 37 we were down 101 points just a few moments ago. right now the dow is down 95 points on the trading session, almost three-quarters of a

percent. microsoft moving to the downside as well today by .5%. we'll show you the s&p in just a moment. the nasdaq is getting hit because of the sell-off in tech and the ten-year is at 1.7 1.70 after what rick santelli called an a-plus-plus action. it was not just the auction but the sell-off in equities driving people into the bond market. much more coming up. we continue to follow the markets for you.

we are monitoring comments by jpmorgan chase ceo jamie dimon. he's talking about inflation and the markets right now. we are going to bring you the prominent head leans as they occ occur. he's taking questions from the audience. we'll monitor that. but first, we have a market flash. >> we're offering shares of celgene after the earlier release of a european medicine's agency report on their cancer drug. ema is expressing concern about the risk/benefit of the drug and that's sending the stock lower today. in a pre-open note from citi, analysts noted that the document is disappointing but he does believe that it is biased in its scientific analyst. we'll have to continue to watch for follow-up on this but sending the stock down by 4.5% today. we're keeping an eye on microsoft. the ceo there, steve balmer,

telling shareholders he wants to be more of a device and services outfit to be more like apple. in a letter to shareholders, ballmer also suggested the company may one day make its own phone to build on its upcoming tablet pc. microsoft cut ballmer's bonus because of slow progress at its online new kniunit. he's now getting $620,000. the max was $3.7 million. ballmer remains bullet-proof. let's talk more with with the deputy managing editor at "wall street journal," and and our jon fortt. welcome to you both. start with the pivot of the company, spencer, to one that sounds more like apple, the idea being services integrated with software, integrated with

devices. is it too late for them to do this. >> well, it's not clear if it is too late but it is definitely something they need to do. it is not just microsoft but there is a larger trend in the technology industry right now toward a vertical intergra inte. apple has shown if you combine hardware and software in an elegantly designed device, it can create a great customer experience. now others were making it more of an official strategy that, question, the future is in combining services and hardware. steve ballmer said the future of the company, yes, in some cases they'll be making actual physical hardware, not just the xbox but tablets and maybe even smartphones. >> to that point, jon fortt, the surface is the tablet on which i guess they have high hopes. when is it out and what are the possibilities here? it's a crowded marketplace. >> tyler, we expect the first

one in just a couple weeks when windows 8 launches. i don't think this is more become more like apple. if anything, it is more like google because they're going to take the two-pronged approach. on one hand they'll go a little more vertical. it was interesting he's spinning this forward and saying they're leaking forward with it. they also want to continue their ecosystem and their licensing. this all speaks to the kind of unusual position they're in where they don't know if their former windows partners, folks like hp and dell are going to follow them strongly into the consumer market but it will be interesting to see what they do on phones particularly if nokia doesn't have a hit with this latest lumia phone. >> is the board running out of patience with mr. ballmer? the amount of money taken away from his bonus. he got 91% of his target, not 100%, is really negligible especially for a guy like him,

but is it telling and is there a change in the wind here? >> i think that's a good point. the actual reduction in his compensation was very minimal. so i think it is more the symbolic gesture that the board is making that they weren't completely happy with the way steve ballmer performed last year. they mentioned two things about how they didn't provide browser choice in europe and how the online division continues to like hemorrhage large amounts of money. but yeah, i think the big question with him is how much more time does he have left at the top of microsoft. it's been a rough period for microsoft. shares have been flat for the last decade. an activist investor accused microsoft of having charlie brown management recently which was a very tough criticism of steve ballmer. yes, i think this does point to the fact that the board is not completely happy with steve ballmer and that his time is limited at the top of microsoft. >> spencer, thank you very much. jon, thank you as well. a quick programming note.

cnbc will be broadcasting the vice presidential debate thursday night. our coverage will be from 7:00 to 11:00 p.m. eastern. up next though -- it's the battle between walmart and amazon. who can deliver products to consumers faster? we'll talk about that. before the break, some of wednesday's biggest movers. keep in mind, the dow jones industrial average is at session lows, off 105 points. monster beverage off 5%. green mmt mountain coffee down. i've been a superintendent for 30 some years at many different park service units across the united states. the only time i've ever had a break is when i was on maternity leave. i have retired from doing this one thing that i loved. now, i'm going to be able to have the time

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we're watching shares of metro pcs, lower today after reports sprint has decided to hold off on a takeover bid of its own that would thwart the t-mobile deal. the. wisdom of that trade has been debated on without. sprint trading up today by 1.1%. another front is -- actually, let's go back to jamie dimon with breaking news he's making comments at council on foreign relations. >> -- though it should be done in collaboration, not like these other laws set up where "you shall be cyber secure, and if you're not we're going to come after you." we need their help. the cia, nsa, department of defense, they actually know what these attacks are at the border sometimes and we don't. so business is going to have to work together in this protect

the american public so we can stop cyber crime. but it is a big deal, it is going to get worse. computers in ten years are going to be 100,000 times faster and so they'll be able to do calculations quicker and get through quicker. we're going to have to meet that in every way, shape or form. believe me -- banks i think are pretty good at this. we've been doing this a long time and there are rules and regulations and -- but we have to really stay in front of it. how many of you are worried about that? don't think of just the cyber security coming over the internet to you. like everything we do, we do authenticate you. we know more about that stuff than some you think. think about the person that joins your company from inside. that's where you're going to get it. >> thank you for that re-assuring point. there is a young lady in the second to last row -- >> create internal fire walls is how you protect yourself from one individual getting all access to all system. >> howe, danielle douglas from

the "washington post." sir, many of the rules coming out of dodd-frank have yet to be written. i'm curious how much of an impact is having on the rest of your regulatory business. >> separate the business, okay? if you look -- think of prior to this quarter. underlying, pretty good. small business loans up 12 straight quarters middle market loans up. market shares up in investment banking. trading's been okay. mortgage loans are up. mortgage problems are coming down. actually pretty good. if you talk about -- i think to your point, dodd-frank, i think 25%'s been done. it is being fought in the courts now. huge -- i think -- it is really hard for me to calculate a number but i'm going to tell you it is going to cost us, overhead, well over a billion dollars. we get rules from brussels. a lot of these are contradictory, overlapping.

all i want at one point as we sit down and have a conversation, what do we really immediate for safety and soundness and all that and what's creating unnecessary burden. that burden is going to be higher the smaller you are, in my opinion. i'm not in favor of that. i don't want to hurt community banks. they have a great role in life. i just think you need collaboration to get it done. it is just not going to get done properly if we're just always fighting with each other. the most important -- capital and liquidity. and there are 398 other rules. but you should know we're trying to work with everyone to accommodate -- we have no choice. i mean we have to accommodate all the -- we are going to do it and we'll do it in a way in the spirit and letter of the law. that's what we're going to do. that doesn't mean we won't comment on it because regulators get very mad at me when i xwhent comment at all. we will comment. but the end of confers should

be, forget jpmorgan. we're going to be fine no matter what. believe me. i'm not worried about jpmorgan. i am worried about the country. we should do these things right for the future of the united states of america, not jpmorgan. >> time for one last one here. >> let me apologize in advance to the many people with their hands up. it is just demand exceeds supply. well known market problem. >> mr. dimon, thanks. garrett mitchen and i write "the mitchell report." i want to ask you arguably a too big to fail question but this is not about jpmorgan chase or barclays. it is about the u.s. and china. china is on the brink of a major change in its leadership. it has written its own sort of prescription for new economic directions which they know they have to initiate or they, too, will fall off the cliff. we may or may not be looking at a major change in leadership in

this country. but we are looking at the fiscal cliff and i wonder from your perspective as somebody who does business all around the world and despite your protestations about not really knowing much about politics, how you assess the relative chances of success more america dealing in the short term with its fiscal cliff and longer term with its ability to get some semblance of good governance and with the chinese to be able to do the same and make the changes in their economy so that the two largest economies in the world will help things stay online. >> china has huge issues it's got to deal with. okay? there are really two. they've got to broaden out their democracy. remember our democracy started as white men over a certain age owned property. 90 million people in the

communist party voted. they've got to broaden it out. every society in the middle class decrates some form of democracy over time and it is hard. they're worried about losing social control and unrest. they've got to broaden out their economy. think of the financial system and the spin wheel. it's not the most important thing in an economy but where investors of all type -- pension funds, insurance, individuals meet through vehicles of all type to invest in projects and companies, start-ups, venture, r & d. they can't macro manage down the reed. they have two huge things to go through. we as the united states should help them do that. it is in our interest that they grow peacefully, that they can take care of their 1.3 billion people, et cetera. there are going to be complaints. but hank paulson had that strategic economic dialogue -- we have to do that. it is the right thing to do. america will have the -- america's might, in my opinion, is based upon three things. economic power, which is the

foundation of all other things and all jobs and all buildings and all -- i know when i see some of the people standing in front of the hoover dam -- the government. that was actually built by bechtel. it was your taxpayer money. the know-how usually comes out of american business. i checked who built the space ships that land on the moon. it was a predecessor to boeing. these are collaborations through government and business and economic and military are directly related and the united states will be the military power for a long time period, as long as we're the economic power. i think the moral power of the united states is called freedom and democracy. and human rights and rule of law and those things. we shouldn't forget that. you go to china, they look at america, they say how lucky we are to have those things and the businesses and why are we complaining so much about our situation? they have a much tougher one. but i think we should help them but make sure we're strong.

we should never give up on our strengths -- which i said are economic, military around moral. folks, thank you very much. appreciate it. >> thank you, sir. >> jamie dimon taking questions after a long ranging interview covering a number of topics at the council on foreign relations. ty, he is always very frank, outspoken, colorful. but things that stuck out to me in this was he re-affirmed the fact that he thought that the united states was the best place on earth to invest right now. he said that basically europe doesn't have the way yet to get out of their mess, although they do have the will to a certain extent. a lot of very interesting comments also about what regulation is costing his bank every year. >> and some of his themes are ones that are familiar to those who have followed mr. dimon in certainly recent years. one of them is the need for collaboration and not antagonism between business and government,

specifically business and the federal government, and that he saw the real benefits. he concluded there on the idea that it was a collaboration, basically, between the federal government and a predecessor of boeing that put a person on the moon 40-some years ago. and those are interesting points, a theme that he has struck many times and it is one of the things that i think has entered into this life-long democrat's relationship with the current administration. it's where he has parted company with them. >> it's going to be interesting. he says he's not interested in running for public office. but you just wonder whether or not he wouldn't accept a treasury secretary position if indeed one was offered under either administration. >> yeah. he was certainly explicit about that in his comments in "vanity fair" magazine, that he didn't want it, "i shall not seek, nor will i accept --" >> but on the other hand hank paulson didn't want it either

but he took it because of the financial situation the united states was in at the time. >> exactly. now to bertha coombs who's been following the remarks of jamie dimon and has some of the excerpts and overview for us. >> one of the interesting things was the issue of bear stearns that came up. of course, jpmorgan bought bear stearns on the eve of the company perhaps needing to file for bankruptcy, facilitated by the fed, and now jpmorgan is being sued in a civil suit over some of those derivatives that bear stearns sold. asked whether he'd do it again, he says -- it's a close call but he also specified, we were working with the government, we were helping the fed out. listen. >> we were asked to buy bear stearns. it was not as if the fed did us a favor. no, we did them a favor. had they gone bankrupt, all of these lawsuits would be no money. there would be no lawsuits. i'm going to say we've lost 5 billion mr. to $10 billion on the bear stearns things now.

yes, i put it in the unfair category. >> overall he says it is unfair that they are being looked at as having benefited from it had when clearly now this is going to be something they have to deal with. interestingly, he was making all these wide ranging comments. he'll be talking to analysts on friday when jpmorgan reports earnings. >> all right, bertha. thank you. trading action now, bob pisani. the dow still down 100 points. >> yeah. couple things. put up the s&p 500. we're now at negative for october for the s&p 500 and the dow jones industrial average. haven't seen that in a while. also a thing to note is we're only 2.8% from the 4 1/2 year highs that we hit a few weeks ago. so this is not a correction of any sort. this is not about europe today. the euro was fractionally higher today. dollar fractionally weaker. that's normally a help for stock. it is more like warnings. we had warnings from cummins, that's weighing on the markets and weak energy markets. look at the s&p sectors here. energy is leading the way to the downside, materials as well.

normally on a day where the weaker dollar -- that's not the days. we're getting more defensive names leading things forward like consumer and utilities. your energy stocks with the warning from chevron, seeing a lot of weakness today in some of the other sectors in the energy group as well. let's go uptown now to the nasdaq where we check in with seema mody who's following the movers there. >> hi, tyler. tech stocks were the key laggard in yesterday's trade thanks to apple and intel. here's where we are at today. intel still moving lower after hitting that 52-week low in yesterday's trade. barclays lowering its price target to $22 a share. social media stocks as a pack are underperform being the major indices. facebook down 3%. some bearish sell side notes to hit the tape. oppenheimer wrifting wall street estimates remain too high for 2013 after looking at that recent com score data. zynga getting a downgrade at piper jaffray. we do have a bright spot but it is not in tech. costco, earnings jumped by 27%.

fueled by stronger membership revenue. that's the best performing stock on the nasdaq 100. >> seema, thank you. gold prices closed just moments ago. sharon epperson is track being the action at the nymex. >> we're right here at $1,765 an ounce. basically flat on session for gold after gold had been down for three consecutive sessions. we're consolidating because traders say monetary easing has already been priced in. traders are kind of buying on the dips here and perhaps still being bullish longer term seeing prices perhaps go to that $1,800 level. but right now consolidating around some of these key levels. dollar has been a key factor over the last several days as well as it has been firm and perhaps an alternative to the gold market. in terms of some of the other metals that we're watching -- the weakness in palladium is

definitely key today and we did get some weak auto sales data coming out of china. sue and tyler, that's part of the reason why we are looking at the weakness of palladium as the weakest component in the metal sector today. back to you. >> thank you very much, sharon. the dow jones industrial average is off 102 points. joining us next, chief u.s. equity strategist at ubs. we will of course ask him whether this market sell-off today means a buying opportunity for you or not. the s&p financials are up a fraction today. home building stocks are up but the automobile sector is on the downside by about .66%. [ male announcer ] the 2013 smart comes with 8 airbags, a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. which can withstand over three and a half tons. one is for a clean, wedomestic energy future

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in today'sy hoo finance poll, we asked whether refinancings are a bigger part of the mortgage market than ever before. where do you stand in 30% say they are refinancing. 37% say they are paying off the mortgage. 11% say it's spending on home improvements. and 22% say i'm going on vacation. sue? now let's see what's coming up on street signs. excuse me. >> not at all, tyler. imagine this, folks -- getting

an outrageous e-mail from your boss saying if obama wins you're oitd out of a job. one ceo did that. as you've just been talking about -- low mortgage rates have got everybody refinancing if they can. but is the re-fi boom hurting housing and hurting the fragile economic recovery. and we've got a big-time wake-up call for slacker nation. we'll debate the economic consequences of all those 30-somethings still living in their parent's basements. back to you guys on "power lunch." >> thank you, mandy. a lot of people are going to be watching that one. the markets may be concerned about the fiscal cliff and a weak economy but during that speech today that we just heard at the council on foreign relations, jpmorgan's ceo jamie dimon says the u.s. is still the best place to invest. >> this attitude somehow how woe is me, how terrible, america's lost -- it's just not true, folks. hopes to who travel around the world, we have the best military on the planet, we will for years. we have the widest, deepest,

most transparent capital markets in spite of what happened. they're still the best -- i'm talking about in all of its glory, asset management, venture capital, private equitequity, markets. we have the best businesses on the planet, small, medium and large. >> is he right? joining us, invest strategy specialist at ubs, jonathan golub. >> i half-share his sentiments. are we the best player on the world stage today to invest? i think probably yes. on the other hand, we do have these fiscal overhangs and it is not just a political issue. we have substantial government debt and fiscal imbalances that need to get addressed and that mean that we're a slower grower than we've been. would i rather be here than anyplace? yes, i would. >> we have a sell-off on wall street today. you tend to take a longer term view of things. some of this is being linked to the doom and gloom about

earnings season and -- or expectations of doom and gloom of earnings seasons. that's been out there for a while. how much of that is factored in to the market and how much of it do you believe? >> i think some of it has been factored in. the important thing is we actually expect earnings to be lower in the third quarter this year than it was in the third quarter of 2011 by about 4%. that's not a good thing. i think what the market is selling off today on is a couple of specific company reports. cummins provided some negative statements, as did alcoa, basically said things are not only ugly now but are likely to stay ugly for a period of time. i think you're right, if we look beyond this earnings season, i think the real issue is something like 4%, 5% earnings growth next year. not as good as it's been in the past but not a disaster. >> we have the election coming up and everybody's handicapping what the market will do depending on what the outcome is. do you play in that game? i mean have you thought about it? what are your expectations? >> obviously we have thought about it. let's first talk about where the expectations are.

the good news is -- at least good news for tv folks is we now have a real race. i think a few weeks ago the expectation was obama's in office, there's no real election. now it is getting very, very close. the key is a surprise will move the markets. romney will be positive for the market. not only because of less regulation and things like that but also the fiscal cliff debate will go better with romney because republicans will probably own both houses of congress and the presidency if romney wins. to me that's -- over the next three months or so, that's the most important issue. >> what if mr. romney does not win? >> if mr. romney doesn't win, effectively you have status quo. we think the fiscal cliff debate goes much worse. first you don't get the romney bounce, you probably get a bit of a sell-off on that. the bigger issue is the end of this year, i think it is going to be the summer of last year around the debt ceiling debate. i think it is going to be real

lreally ugly. >> what areas of the market do you like with the longer term view past the election? >> right. if you look out beyond just the election and fiscal cliff issues, i think the key is, if we're in a slower economic environment, 1.5%, 2%, 2.5%, you need companies that underline earnings growth. you'll find that in a variety of areas, you'll find it in good staples company and fine technology companies. but being able to identify that to me is more important than simply buying dividend yields. as far as specific sectors are concerned of the defensive sectors, we would really rather rather be in staples or health care, more than utilities which we aren't really a fan of. tech has really taken it on the chin lately, but there is the ability to grow in a weak environment for technology stocks. >> jonathan golub, thank you for joining us today. let's recap the markets for you at this point because we are at our lows of the session. we just had a gap to the downside, about 130 points now

in negative territory for the dow at 13,338. can you guys put ucht p the 10- yield for me? i think we had a low -- which should be 1.69% on the 10-year yield. at this point they're moving into the bond market. look at that move on the 10-year yield. 1.68%. ty? it's going to be a rough afternoon. >> moving into bonds and out of storks as we speak. this is going to make some people's blood boil. billionaires getting big tax breaks for buying up swanky condos in new york. swanky franky. robert frank on the story. >> very swanky. the tax breaks are amazing. the question everyone will be asking -- do billionaires pay $90 million for an apartment really need a tax break? a tax break aimed at low income folks? we'll dive into that issue next on "power lunch." [ male announcer ] what if you had thermal night-vision goggles,

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knock-down drag-out battle between walmart and amazon, walmart's now looking at same-day delivery of some of its online orders in selected

markets. court nay reagan following walmart's investor meeting. >> hi, tyler. it is goliath versus goliath. amazon has a long, strong history online and walmart's core strength has long been in store. as more analysts begin to believe, retailers need to offer multic multiple channels for consumers, walmart is contemplating same-day delivery for orders placed before noon. >> demand gets gauged and scale gets delivered with 4,000 pre-positioned super center/fulfillment center/warehouse. we have the opportunity to give the customer what they want today, now. >> walmart's charging $10 for the service in the test phase in northern virginia, d.c., philadelphia and minneapolis but the bay area to be added soon. amazon offers next-day delivery and with a prime membership, shouz thousands of items ship

free. walmart trading at all-time highs today, amazon down 2%. today chief merchandising officer for walmart said walmart has doubled its ipad inven trip for the holiday season. this is going to cause outrage. while many americans are struggling to stay above water with their mortgages, the mega rich that are moving into a new condo building under construction are getting massive tax breaks. it begs the question -- do billionaires paying $90 million for an apartment need a tax break? i think i know the answer. cnbc's wealth editor robert frank though is here to tell us about that. >> thanks, sue. hi. outrage is right. the billionaires buying apartments at the 157 tower in manhattan have some very special amenities. it is the tallest residential tower in new york. penthouses are more than 10,000 square feet. they have a concierge and it turns out very generous tax breaks totaling millions of dollars a year.

cnbc has obtained documents showing that new york's new billionaire tower is getting millions of dollars in tax breaks from a program designed for low-income housing. here's how it works. billionaire who purchased the 75th and 76th floor pay more than $90 million for that apartment. normally property taxes would be around $230,000 a year. with these tax breaks they're only paying $20,000 a year. that's a savings of more than $200,000 a year. now the total savings for the top 13 floors of this building -- more than $1.5 million a year. this for billionaires who presumably could afford it. how is this even possible? it is a program called the 421a program designed to fund low income housing. buildings get 80% of their taxes if they set aside 20% of the units for affordable housing. some buildings like 157 just purchase certificates that aloud them to get the tax breaks but the affordable house something located somewhere else, in this case the bronx or brooklyn.

tax savings meanwhile is passed on to the buyers. xtel who is 3wi8ding this to b has the program has helped countless housing units in the city and it is fully complying with the rules. a city councilman said the building cost the city $1 billion a year in the tax loss and calls this project outrageous. >> you're going to get so many people -- you're going to crash the site. >> i hope so. >> robert, thank you very much. appreciate it. coming up in the next hour -- street signs has top apple analyst gene munster from pipalafterry. he looks at what an ipad mini could mean for the stock and the one thing that he thinks could keep apple going for years to come. ♪

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session. we're down 131 points on the trading day. the s&p 500 is almost a full percent. the s&p 500 is off .66% or just about ten points. nasdaq is off .5% at 1,593. it is going from safety into treasuries where at 1.68% on the 10-year note. we had had an a-plus auction and the money, guys, is going straight into treasuries today. ty, back to you. matt, patience is a virtue is with us now. the market has been selling off for a few days and we look at the election and we look at the fiscal cliff. your argument is, in part, that really people are looking at earnings. that's what it is all about. >> yeah. we're going to micromanage these things as we go forward. alcoa and cummings obviously bore most of the headlines for this day today. costco and yum! have done pretty well.

so as companies actually report, if you came out earlier and said you cut your numbers for the quarter, you took your pain early but now you have a chance to get it back because earnings are so low. >> jonathan golub said cummins, the fact that they said things were so difficult in so many parts of the globe for them, that really struck him. >> seems like the u.s. is going to benefit more, if you're more international exposure, you're going to be hurt more. that's what we see going forward. yum! may shall tbe the only dif one. >> street signs is coming up right now. we talk about how the polls are really starting to impact these markets and talk about where all those re-fi